Snub to taxpayer as RBS plans bonus spree

Royal Bank of Scotland, which is 70% state-owned, is planning to hand out record bonuses to staff which would equal those dished out at the height of the financial boom.

Payday: Top 20 performers may get one-off bonus payments of between £1m and £5m.

In a move that will outrage many who see it as a snub to taxpayers who have bailed the bank out for £20bn, bonuses totalling millions of pounds could be awarded to staff.

Employees in its investment banking arm could be in line for an average payout of about £240,000, while the top 20 performers may get one-off bonus payments of between £1m and £5m.

These would top the sums awarded at the peak of the market in 2007 and are two thirds higher than those paid out last year.

After the row over huge rewards for City workers was reignited last week by American banks Goldman Sachs and JP Morgan, the RBS plans are a further sign that the bonus culture is returning just a year after the banking system teetered on the brink of collapse.

Any such moves by RBS will have to be approved by UK Financial Investments which oversees taxpayers' investments in banks. Last night, RBS said the projected figures were a 'speculative punt' and described the reports as 'complete fabrication'. A spokesman said: 'No decisions have been taken on bonuses. They are made based on the figures at the end of our financial year in December.'

Barclays is on track to post record profits in 2009 of more than £10bn, which will also trigger a round of multi-million pound bonuses.

Writing in today's Financial Mail, Gordon Brown says that the test of whether the banking culture has really changed for the better will be 'the end of the old short-term bonus regime that encouraged recklessness'.